I’m a prospective real estate investor looking to buy my first piece of real estate soon. As of now, one of my top choices are the Deer Creek Condos located in Gurnee, IL. I’m looking for any input at all as to whether these are these a good investment or not? My plan is to buy an unrenovated one, do the renovation myself and then refinance and use the equity to purchase more real estate. They’re asking $99k for a one bedroom and $130’sK for a two bedroom. Assuming I could buy at these prices or a tad bit lower what do you think? If these aren’t good, then recommendations for other real estate in the area/price range would be appreciated.
After Repair Value
what will be the After Repair Value of these condos?
if you buy one at say 99k or even 95k - how much increase in equity will you get? say you’re putting in 5k -
15,000?
25,000?
50,000?
is 99k for the one bedroom below market value? if so, by how much?
if it’s not over AT LEAST 25% BELOW market - then you’re not really engaging in rei. you’re buying what anyone can buy and trying to make ungotz. you buy it for 95k, lets say…it needs some work - put heck…2500 into it - now it’s worth…107,500 maybe??? [don’t know you’re area - but it’s a one bedroom condo]
i don’t know your market, is this about right?
so you’ve got to buy a piece of property, get all the financing, pay for all the closing costs, pay for all the repairs and do all the repairs (or worse - pay someone else to) - and you’re left with a projected profit of say…6,500
107,500 - 95,000 - 2,500 [repairs] - 3000 [closing costs] = 7000
that’s IF you sell it for 107,500 and it does not include any holding costs and other miscellaneous costs, which would probably lower that 7,000 to about 2,000.
i’m just throwing out crazy numbers here - and not to discourage you - but to make a point - rei is about buying “right” - that means BELOW market value. especially when you’re just starting out - i almost purchased a rental locally - where i would have been stretched so freakin thin until i put the breaks on it and re-evaluated rei. the KEY is to “buy right”. period. whether it’s rentals or rehabs.
take this same 99k condo right - now do this (i learned this on reiclub 
but it’s common knowledge in rei)
107,500 X .70 - 5,000 = 70,250
ARV X .70 - Expenses/Costs = your maximum offer price
that 107,500 - is based on extensive market analysis and comps. that .70 gives you you’re margin and expenses are based on your extensive property analysis…
it’s easy to throw around ideas, plans and numbers, but it’s a different ball game when you really start to get into the thick of things - the ins and outs. there really is soooo much to factor in. it’s unbelievable, but very doable. take some time. learn before you burn (your money).
have fun…
ggencev,
please be careful as Lake county is next in line for massive growth since north cook is getting a bit expensive and saturated. People are looking for a big bang for their buck. There are lots of new development so make sure that you will be able to sell/rent your condo after rehabbing.
Please keep us posted.
Good Luck!!!
Ronnie